Facts, the historian E.H. Carr argued, are like fish in a vast ocean: what one catches to a large extent depends on where one chooses to fish and on the kind of tackle one uses. Professor Paul Samuelson has offered (HES Bulletin, Fall 1987) a prescription for stimulating demand for history of economics. He proposes “that history of economics more purposefully reorient itself toward studying the past from the standpoint of the present state of economic science. To use a pejorative term unpejoratively, I am suggesting Whig Economic History of Economic Analysis.” (Samuelson 1987: 52) Samuelson promises that fishing with the tackle of present-day theory will catch commercially attractive historical fish and illustrates this approach with his own work in history of economics.

The idea of value-free economics is an old methodological issue. It has given rise to one of the most important controversies in the history of economic thought. The discussion was important because it had to do with the scientific nature of economics. One can still find a significant number of methodological works (e.g. Coddington 1972, Gordon 1977, Samuels 1977, Sugden 1981, Colander 1994) which echo this old controversy. Most economists today, though, would agree that the claim of an economic theory free from values is essential in establishing the scientific nature of the discipline. A positive, value-free economics, in the sense of not relying on any particular set of value judgments or on any philosophical or psychological framework, is generally seen as the ideal. This approach has crucially influenced important branches of economics such as microeconomic theory. The current established position was a product of a historical process which played a significant role in the formation of the body of economic theory. Furthermore, the idea of what is value-free economics has changed since its first introduction as a scientific ideal. The nature of this change is also important for understanding the present conception of the scientific character of economics.

In the past three decades economics has entered a new phase in its development. The new stage did not involve a revolutionary change of basic tools as occurred with the triumph of neoclassical economics at the turn of the twentieth century and Keynesian economics in the post World War II era. Rather the recent mutation involves the introduction of economic tools of analysis into areas which have traditionally been part of contiguous disciplines. The invasion of economics came to be referred to, even by its enthusiasts (e.g., Stigler 1984; Radnitzky and Bernholz 1986), as “economics imperialism.”

This article reconsiders, in the light of the current financial turmoil, Irving Fisher’s 1911 theory of financial crises and his 1933 debt-deflation theory of Great Depressions. Particular attention is given to the role of high debt ratios, high leverage ratios, and changes in the purchasing power of money in Fisher’s analysis, and to Fisher’s compensated dollar plan to stabilize the purchasing power of money. It is argued that indexing the unit of account would accomplish Fisher’s goal of stabilization without the practical difficulties of Fisher’s compensated dollar plan.

This paper explores John Commons’s views toward Jews in order to assess whether his published writings contain assertions that today would be stigmatized as anti-Semitic. The evidence we provide shows that Commons’s racial characterization of Jews was framed within a broad and indiscriminate xenophobic framework. With other leading Progressive Era social scientists, in fact, Commons shared the idea that the new immigration from eastern and southern Europe would increase competition in the labor market, drive down wages, and lead Anglo-Saxon men and women to have fewer children, since they would not want them to compete with those who survive on less. Within this general xenophobic context, Commons developed assertions regarding immigrant Jews that show traces of explicit anti-Semitic accusations.

It is often claimed that Adam Smith and Edmund Burke held similar views on matters relating to political economy. One area of tension in their thought, however, was the institutional credibility of Britain’s East India Company. They both argued that the Company corrupted market order in India, but while Smith supported the termination of the firm’s charter, Burke aspired to preserve it. This article examines why they arrived at such divergent conclusions. It argues that the source of Burke and Smith’s friction arose from the dissimilar frames of reference through which they assessed the credibility of the Company. Burke examined the corporation’s legitimacy through the lens of British prescriptive, imperial, and constitutional history, yet Smith evaluated it as part of his larger attack on the mercantile system. These different frames of reference were responsible for the further incongruities in their thought on the Company relating to the role of prescription and imperial honor in political communities, the qualifications of traders to rule, and the appropriate tempo of policy reform. This article concludes that, even with such differences, the two thinkers’ respective criticisms of the Company illustrate the threat that monopolies pose to the liberal order.

Smith explicitly spells out the term “invisible hand” in only three texts, each in a different work. What is embarrassing to neoclassical welfare theory is that these explicit references have little to do with what came to be understood by the metaphor. In particular, the explicit reference to the invisible hand in The Wealth of Nations (WN) is not about the efficiency of the market in allocating resources. Rather, it is about, ironically, how impediments in the international capital market generate great benefits.

Research within the history of economic thought has focused only little on the development of economics under dictatorship. This paper attempts to show how a country with a relatively large and internationally established community of social scientists in the 1920s, the Soviet Union, was subjected to repression. We tell this story through the case of Isaak Il’ich Rubin, a prominent Russian economist and historian of economic thought, who in the late 1920s was denounced by rival scholars and repressed by the political system. By focusing not only on his life and work, but also on that of his opponents and institutional clashes, we show how the decline of a social science tradition in Russia and the USSR as well as the Stalinization of Soviet social sciences emerged as a process over time. We analyze the complex interplay of ideas, scholars, and their institutional context, and conclude that subsequent repression was arbitrary, suggesting that no clear survival or career strategy existed in the Stalinist system, due to a situation of fundamental uncertainty.

The individual's labor supply model, usually called leisure-income, is very well known in labor economics. It determines the time a person spends on the labor market by studying it as the outcome of a trade-off between leisure and income. The model is developed in almost every book on microeconomics. But strangely enough, although all economists know the model, no one seems to know precisely its origins.

In a recent paper, R. Ekelund and D. Walker (1996) argue that, “[i]ncentives, utilitarian principles, and the diffusion of property rights are the key to understanding Mill on the statics and dynamics of ‘equity and justice’”(p. 576). Their paper, which deals with John Stuart Mill's views on taxation, reads very much like a modern defense of popular capitalism. From the static point of view, it is imperative not to interfere with the internal relationship between economic variables and thus, distort incentives (proportional income tax). From the dynamic point of view, “inheritance taxes [are] the essential mechanism of an evolutionary change towards an efficiently functioning capitalism” (p. 578, italics added).

It has always been a puzzle why nineteenth century political economists were quite so gloomy. Why did they picture economic actors as motivated so single-mindedly by self-interest? Why did they see ahead the negative effects of diminishing returns, especially falling profit rates and rising rent shares, while all around them the evidence was pointing in the other direction? Why did they go on about the stationary state at a time when technical change was everywhere the norm? This gloom was hardly foreshadowed by the eighteenth century founders of political economy—Hume, Smith, and the Physiocrats (although for a contrary view see Robert Heilbroner 1973). It seems to have begun with Malthus and Ricardo, but it remained strong in the marginalist economists as well. Alfred Marshall and his followers rested their case for the necessity of careful marginal allocation of resources, and the intolerability of the costs imposed by trade unions and other rent seekers, on the ground that there were just not enough goods and services to go around. The notion of scarcity legitimized gloom.

Positive Theory of Capital (1889) is a classic which contains Eugen von Böhm-Bawerk's 1889 correct vision of how the interest rate might be determined by the interplay of systematic time preference (“impatience”) and time-phased technology's productivity. But he was not quite able to formulate his intuitive vision in terms that would satisfy today's persnickety jury of theorists. And indeed the classic Rate of Interest (1907) by his younger contemporary, Irving Fisher, seemed to be disagreeing with Böhm-Bawerk's treatment of time's net productivity; but, as Fisher was unable to make clear until 1930, he was objecting only to Böhm-Bawerk's formulation of the role of productivity in interest determination. In point of fact, Fisher, who was so long identified (wrongly, but understandably) as an “impatience theorist,” considered his own main contribution to interest theory to be his clarification of how the technological superiority of time-consuming processes cooperated in the determination of the equilibrium interest rate.

History, if viewed as a repository for more than anecdote or chronology, could produce a decisive transformation in the image of science by which we are now possessed (Kuhn, 1962a, p. 1).

Certain types of experimental findings serve as benchmarks, permanent facts about phenomena which any future theory must accommodate, and which in conjunction with comparable theoretical benchmarks, pretty permanently force us in one direction. … The remarkable fact about recent physical science is that it creates a new, collective, human artifact, by giving full range to three fundamental human interests, speculation, calculation, and experiment. By engaging in collaboration between the three, it enriches each in a way that would be impossible otherwise (Hacking, 1983, p. 248).

In his widely read and cited History of Economic Analysis (Schumpeter 1954), Joseph Alois Schumpeter dismissed Adam Smith’s Nature and Causes of the Wealth of Nations (Smith 1976a) in a blunt and often ad hominem manner. In fact, he even questioned Smith’s intellectual mettle. We argue that Schumpeter’s assessment might have resulted from his failure to appreciate the rhetorical structure of Smith’s masterpiece (and the highly political character of its Book V), a failure possibly due to Schumpeter’s not having access to student notes of Smith’s lectures on rhetoric that surfaced only after Schumpeter’s death. We argue that Schumpeter’s failure to appreciate the rhetorical structure of Smith’s masterpiece is a prominent example of the consequences of not taking into account Smith’s rhetorical strategies and principles when trying to understand the man and his oeuvre.

Between 1830 and 1860, Germany provided the world with some of the pioneers of marginalism. Johann Heinrich von Thünen and Hermann Heinrich Gossen are shining examples. Then German theory declined. The center of German-language theory shifted to Vienna, and from 1885 to 1930 the German academic establishment, dominated by the Historical School, was virtually cut off from the progress of mainstream economics. Things began to change around 1930; German economists started again to make original contributions. By the end of the war, they had provided Germany with a solid link to the mainstream. Except for Erich Schneider, nobody contributed as much to this development as Heinrich von Stackelberg.

The paper explores why and how economists entered the courtrooms as expert witnesses in employment discrimination cases in the US. The main sources are published legal decisions. I analyze the courts’ and economists’ discourses on the use of a specific method: multiple regression analysis in relation to litigation history, academic debates, and the institutional settings of expertise within the courts. I first show how the early reception of the method in the late 1970s did not involve systematic rejection from the courts but rather a large amount of skepticism. I then illustrate how economic theory underlying the method was progressively introduced in the “judicial tool kit” and how the debates in the courtrooms relate to the debates in academia in the 1980s. By 1989, practical and ethical questions regarding the institutional settings of experts’ testimony took center stage, reflecting the increasing professionalization of forensic economics.

One of the pivotal moments in the move toward mathematizing economics occurred at the turn of the twentieth century, with Leon Walras as perhaps its most ardent champion. Yet, there is no small irony here, in that the leading French mathematicians to whom Walras turned to buttress and defend the case for a mathematical economics, especially Henri Poincare and Emile Picard, laid out reservations to the scope of this mathematizing program. They even pointed to matters, including the hold of the past on future events and hysteresis, a subject already in the discourse of mathematical physicists, which might have fashioned economics differently from the neoclassical mold being formed. This alternate pathway, though, was not pursued at the time.